Carnegie Mellon University Uniform Guidance Reports Year Ended June 30, 2019 (With Independent Auditors’ Reports Thereon)
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Carnegie Mellon University Uniform Guidance Reports Year Ended June 30, 2019 (With Independent Auditors’ Reports Thereon) Carnegie Mellon University Index June 30, 2019 and 2018 Page(s) Report of Independent Auditors and Consolidated Financial Statements Report of Independent Auditors………………………………………………………………………………….1-2 Consolidated Statements of Financial Position………………………………………………………………………………………………………………………..3 Consolidated Statements of Activities…………………………………………………………………….………………………………………………..4-5 Consolidated Statements of Cash Flows………………………………………………………………….…………………………………………………………6 Notes to Consolidated Financial Statements………………………………………………………………………………………………………………….7-39 Schedule of Expenditures of Federal Awards……………………………………………………………...................................................40-49 Notes to Schedule of Expenditures of Federal Awards..…………………………………………...………………………………………………………………………50-51 Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards………………………..……………................................................................52-53 Independent Auditors’ Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance……………………………….………………………..……………......................................54-55 Schedule of Findings and Questioned Costs….……………………………………………………………………………………………………………………..56 KPMG LLP BNY Mellon Center Suite 3400 500 Grant Street Pittsburgh, PA 15219-2598 Independent Auditors’ Report The Board of Trustees Carnegie Mellon University: Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Carnegie Mellon University and its subsidiaries (the University), which comprise the consolidated statement of financial position as of June 30, 2019, the related consolidated statements of activities and cash flows for the year then ended, and the related notes to the consolidated financial statements. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Carnegie Mellon University and its subsidiaries as of June 30, 2019, and the changes in their net assets and their cash flows for the year then ended in accordance with U.S. generally accepted accounting principles. KPMG LLP is a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Emphasis of Matters As discussed in Note 2 to the consolidated financial statements, in 2019, the University adopted Accounting Standards Update (ASU) No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements for Not-for-Profit Entities; ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), as amended; ASU No. 2018-08, Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made; and ASU No. 2016-02, Leases (Topic 842), as amended. Our opinion is not modified with respect to these matters. Other Matter The accompanying consolidated financial statements of the University as of June 30, 2018 and for the year then ended were audited by other auditors whose report thereon dated October 8, 2018, expressed an unmodified opinion on those consolidated financial statements, before the adjustments to adopt ASU No. 2016-14 as described in Note 2 to the 2019 consolidated financial statements. As part of our audit of the 2019 consolidated financial statements, we also audited the adjustments described in Note 2 that were applied to adopt ASU No. 2016-14 retrospectively in the 2018 consolidated financial statements. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2018 consolidated financial statements of the University other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2018 consolidated financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 25, 2019 on our consideration of the University’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the University’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the University’s internal control over financial reporting and compliance. Pittsburgh, Pennsylvania October 25, 2019 2 Carnegie Mellon University Consolidated Statements of Financial Position June 30, 2019 and 2018 (dollars in thousands) 2019 2018 Assets Cash and cash equivalents (Note 2)$ 514,765 $ 481,288 Accrued interest and dividends 1,822 1,521 Accounts receivable, net (Note 4) 75,133 61,222 Pledges receivable, net (Note 5) 85,103 104,893 Student loans receivable, net (Note 4) 14,531 17,464 Investments (Note 6 and Note 8) 2,521,844 2,385,406 Assets held in trust by others (Note 8) 10,702 11,066 Prepaid expenses and other assets (Note 2) 47,717 46,983 Right-of-use assets (Note 9) 74,860 - Land, buildings and equipment, net (Note 10) 1,066,641 965,934 Total assets$ 4,413,118 $ 4,075,777 Liabilities Accounts payable and other liabilities (Note 2)$ 220,926 $ 202,082 Deferred revenue (Note 4) 149,834 104,779 Federal student loan funds (Note 2) 15,115 14,828 Present value of split interest agreements payable (Note 2) 14,983 17,028 Right-of-use liabilities (Note 9) 73,174 - Debt obligations (Note 11) 540,818 546,290 Total liabilities$ 1,014,850 $ 885,007 Net assets Without donor restrictions (Note 12)$ 1,564,490 $ 1,464,533 With donor restrictions (Note 12) 1,833,778 1,726,237 Total net assets$ 3,398,268 $ 3,190,770 Total liabilities and net assets$ 4,413,118 $ 4,075,777 The accompanying notes are an integral part of these consolidated financial statements. 3 Carnegie Mellon University Consolidated Statement of Activities Year Ended June 30, 2019 (dollars in thousands) Without With Donor Restrictions Donor Restrictions Total Revenue and other support Tuition and other educational fees revenue, net of financial aid$ 561,835 $ - $ 561,835 Sponsored projects revenue (Note 4) Software Engineering Institute 141,750 - 141,750 Advanced Robotics for Manufacturing Institute 8,089 - 8,089 Other grants and contracts 274,954 - 274,954 Investment income 62,870 12,412 75,282 Contributions revenue (Note 5) 26,283 116,522 142,805 Auxiliary services revenue 68,205 - 68,205 Other revenue sources 89,811 408 90,219 Net assets released from donor restrictions 73,611 (73,611) - Total revenue and other support$ 1,307,408 $ 55,731 $ 1,363,139 Expenses Salaries$ 685,913 $ - $ 685,913 Benefits 148,056 - 148,056